Debate

Capitalism, Climate Change and the Transitionto Sustainability: Alternative Scenarios for the US,China and the World

Minqi Li

ABSTRACT

This contribution evaluates the geopolitical and technical issues involved inclimate stabilization and discusses alternative technical paths towards therequired emission reductions in the US, China and the world. There areno plausible scenarios in which climate stabilization is compatible with apace of capital accumulation required for economic and political stabilityunder a capitalist system. Meaningful and effective actions towards climatestabilization presuppose and require fundamental social change.

INTRODUCTION

As a historical system, capitalism first emerged in Western Europe at thebeginning of the sixteenth century and has since expanded to encompassthe entire globe (Wallerstein, 1979). In the capitalist era, world population,consumption and production have experienced unprecedented, explosivegrowth. The activities of material exchange between humans and the earth’secological system have overwhelmed the ecological system’s natural op-erative capacity.1 We are now confronted with a multi-dimensional globalenvironmental crisis that threatens to undermine the basis of civilization andthe survival of the human species. Global climate change is among the mostimportant, and potentially the most catastrophic, symptoms of the crisis.There is now scientific consensus that the emission of greenhouse gases,which primarily results from the consumption of fossil fuels (which globalcapitalism has relied upon as its main source of energy supply), has been the

The author would like to thank the editors and the anonymous referees for many of their excellentsuggestions concerning both the style and the content of the paper. These suggestions have madethe paper much stronger than it would otherwise have been.

1. According to the Living Planet Report 2008, the world’s total ecological footprint, whichmeasures humanity’s demand of the earth’s living resources, now exceeds the earth’sregenerative capacity by 30 per cent (WWF et al., 2008).

Development and Change 40(6): 1039–1061 (2009). C© Institute of Social Studies 2009. Publishedby Blackwell Publishing, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main St.,Malden, MA 02148, USA

1040 Minqi Li

primary factor behind the observed increases in global temperatures (IPCC,2007a).

In recent years, China has become a major driving force of the globalcapitalist economy and has overtaken the US to become the world’s largestemitter of greenhouse gases. China and the US together account for about40 per cent of the global emissions of carbon dioxide, the principal green-house gas. Unless both countries take meaningful steps to reduce emissionsin accordance with their global obligations, there is virtually no hope forglobal emissions to be reduced to levels consistent with those required forclimate stabilization.

It would be naive to think that climate stabilization can be accomplishedwithin the historical framework of the existing social system. In the US,China and the world as a whole, meaningful and effective actions towardsclimate stabilization presuppose and require fundamental social change. Inthis contribution, I evaluate the geopolitical and technical issues involvedin climate stabilization and discuss alternative technical paths towards therequired emission reductions in the US, China and the world. I argue thatthere are no plausible scenarios in which climate stabilization is compatiblewith a pace of capital accumulation required for economic and political sta-bility under a capitalist system. The article concludes by discussing possiblesocial changes required for achieving climate stabilization in the US, Chinaand the global context.

CAPITALISM AND SUSTAINABILITY

It is no coincidence that modern economic growth (the kind of economicgrowth that takes place at exponential rates and seems to go on indef-initely) has taken place only in the capitalist era. Capitalism is a so-cial system in which society’s surplus product (the total product minuswhat is necessary to meet the population’s basic needs) is controlled bya privileged minority that forms the ruling class. Capitalism is unlike allprevious societies; it is the only social system so far in which market re-lations are pervasive and dominant in the economic and social life of thesociety.

When market relations are pervasive and dominant — so that virtuallyevery aspect of economic and social life can be measured and valued bymoney — individual capitalists, businesses and states are under constantand intense pressure to compete against one another. Those who fail inthis market competition will cease to exist as capitalists. To survive andprevail in competition, each capitalist, business or state is compelled to usea substantial portion of the surplus product at its disposal (profits or taxes)to engage in capital accumulation. As a result, under capitalism, there hasbeen a systematic tendency for population, production and consumption to

Alternative Scenarios for the US, China and the World 1041

expand on increasingly larger scales. Even today, this is still considered bymany as the primary virtue of capitalism.2

To achieve ecological sustainability, human impact on the ecological sys-tem in all its dimensions must stabilize at levels within the system’s naturaloperative capacity. Theoretically, economic growth may be made compat-ible with ecological sustainability if ecological technological progress canproceed sufficiently rapidly so that environmental impact per unit of eco-nomic output falls more rapidly than economic output grows. Technologicaloptimists, such as Hawken et al. (1999) and Brown (2008), argue that throughmassive reductions of material and energy throughputs per unit of economicoutput, ecological sustainability can be achieved without undermining eco-nomic growth and material prosperity. However, in reality, it is impossiblefor human economic activities to have zero impact on the environment. Aslong as the environmental impact per unit of economic output remains posi-tive and does not approach zero, an infinitely growing economy will sooneror later lead to an environmental impact on an increasingly large scale, andwill violate the requirements of ecological sustainability (Huesemann, 2003;Trainer, 2001).

More importantly, the arguments of the technological optimists fail to takeinto account the political, technological and environmental realities withinwhich global capitalist accumulation has taken place. First, the capitalistworld system is based on inter-state competition. The inevitable conflicts ofinterests between nation states and the constant pressure for them to pursuenational capital accumulation make it very difficult, and in the case of cli-mate stabilization nearly impossible, for global environmental regulation tofunction effectively. Second, the existing physical and technical infrastruc-ture of the global capitalist economy is based on non-renewable resourcesand ecologically unsustainable technologies. Even if economic growth canbe made compatible with sustainability under idealized technological con-ditions, it would nevertheless take several decades to replace the existinginfrastructure with a new, ecologically sustainable infrastructure.

However, the global environmental crisis (and especially the climatechange crisis) is now developing so rapidly that the global ecological systemis literally on the verge of collapse. Thus, as long as the global economycontinues to be organized in accordance with capitalist principles committed

2. The idea that market competition under capitalism motivates and compels individuals andbusinesses to generate savings and use savings to accumulate capital is a fairly conventionalconcept, widely accepted by classical, neoclassical, Austrian and Marxist economists. Forthe economic ideas of Smith, Ricardo, Mill and Marx, see Hunt (2002). For a modern neo-classical analysis of how capitalism drives innovation and economic growth, see Baumol(2004). Immanuel Wallerstein, the leading world system theorist, explicitly defines capi-talism as a historical system based on the pursuit of the ‘endless accumulation of capital’(Wallerstein, 1979). James Gustave Speth, a leading environmental scholar, also regardsthe pursuit of perpetual economic growth as the defining feature of modern capitalism(Speth, 2008).

1042 Minqi Li

to endless economic growth, there is virtually no hope that ecological catas-trophes can be averted.

ECONOMIC GROWTH AND CLIMATE CHANGE

According to the Intergovernmental Panel on Climate Change (IPCC,2007b), global emissions of carbon dioxide must fall by 50–85 per centfrom 2000 to 2050 to prevent global warming occurring by 2–2.4 degreesCelsius from pre-industrial times (widely considered to be the thresholdrequired to prevent climate catastrophes that could threaten the survivalof humanity and civilization). Since the IPCC reports were published, newstudies have pointed out that they seriously underestimated both the potentialconsequences and the urgency of climate change and far more drastic actionsare required to prevent civilization-threatening catastrophic consequences.James Hansen, one of the world’s leading climate scientists, argues that thecurrent atmospheric concentration of carbon dioxide will have to fall fromthe current level of 385 parts per million (ppm) to no more than 350 ppm toprevent the climate system from moving beyond dangerous ‘tipping points’that could lead to runaway global warming beyond human control (Hansenet al., 2008).

Hansen’s 350 ppm requirement roughly corresponds to IPCC’s 85 per centreduction requirement.3 The rest of this essay works with the assumptionthat an 85 per cent reduction of carbon dioxide emissions from 2000 to 2050would be required for climate stabilization. This translates into an averageannual rate of reduction of 3.7 per cent between 2000 and 2050. Figure 1compares the actual annual rates of change of carbon dioxide emissions fromfossil fuels and the annual rates of change of emission intensity of GDP (theratio of world carbon dioxide emissions to world GDP) for the period 1960–2006, with the annual rates of reduction required for climate stabilization.From 1960 to 2006, for each and every year, global emissions grew at rateswell above what is required for 85 per cent reduction. For almost every year,emission intensity failed to fall rapidly enough to match the 85 per centreduction requirement. Rates of change of emission intensity essentially tellus where the rates of change of emissions would be if economic growthwere to be zero. Thus, given the current pattern of technical change, theglobal economy needs to stop growing immediately if there is to be anyhope of achieving climate stabilization. In fact, since economic growth andemissions growth have continued since 2000, climate stabilization wouldrequire more rapid reduction of emissions than is suggested in Figure 1.

3. According to the IPCC report, an 85 per cent reduction of carbon dioxide emissions from2000 to 2050 would help the atmospheric concentration of carbon dioxide equivalent tostabilize at 445 ppm, which corresponds to an atmospheric concentration of carbon dioxideat 350 ppm.

Alternative Scenarios for the US, China and the World 1043

Figure 1. Carbon Dioxide Emissions from Fossil Fuels: HistoricalPerformance and Climate Stabilization Requirements (Annual Rate of Change)

0.08

0.06

0.04

0.02

0

-0.02

-0.04

-0.06

1960 1970 1980 1990 2000 2010 2020 2030 2040 2050

Emissions Emission Intensity of GDP 85 Percent Reduction

Note: World GDP is calculated with constant 2005 purchasing power parity dollars.Source: World Bank (2008).

THE GEOPOLITICS OF CLIMATE CHANGE

Even if it is technically feasible to make climate stabilization compatiblewith economic growth, efforts aimed at climate stabilization are likely toface insurmountable political obstacles under the capitalist world system.Capitalism is a system based on inter-state competition, which is essentialto secure favourable political conditions for capital accumulation (Arrighi,1994; Wallerstein, 1979). Within the world system, states are under constantpressure to compete against each other economically and militarily.

Climate stabilization would require the substitution of de-carbonized en-ergy sources (which are currently often more expensive than fossil fuels)for conventional fossil fuels, or the adoption of energy efficiency measuresthat businesses otherwise would not adopt (the economic benefits of thenew energy efficiency measures may be smaller than their economic costs).Climate stabilization measures would thus raise the short-term and medium-term costs for capitalists and slow down the pace of capital accumulation.Few states would be willing to take such actions towards emissions reduc-tion unilaterally as this could seriously undermine their competitive positionin the world system. On the other hand, there is no world government thatcan effectively discipline the individual capitalist states and help to pro-mote the long-term, structural interest of the system as a whole. Historically,successive hegemonic powers have on occasion acted as proxies of world

1044 Minqi Li

government and helped to maintain a careful balance between inter-statecompetition and the promotion of the systemic interest. However, the UShegemony is in decline and there is no obvious successor that could act asthe next hegemonic power and effectively regulate the system.4

The problem is further complicated by the fact that the capitalist worldsystem is characterized by fundamental inequalities in the distribution ofincome, wealth and power. Within the system, states are divided into threestructural positions — core, semi-periphery and periphery — depending ontheir relative advantages or disadvantages in the global division of labour(Wallerstein, 1979). Among the core states, the European Union has beenmost active in promoting the global effort of climate stabilization. In 2007,the European Commission announced the objective of reducing carbon diox-ide emissions by 20 per cent by 2020, measured against 1990 levels. By itself,however, the European action would fall far short of what would be requiredfor global climate stabilization. Given current relative contributions to globalemissions, the planned European emissions reduction, if achieved, could beoffset by just a few years of emissions growth in China. Moreover, whilethe latest European Summit (which took place at Poznan in December 2008)reconfirmed the 20 per cent emissions reduction goal, it also made manyconcessions to heavy industries and Eastern European countries. The dealalso allowed the European countries to buy ‘credits’ to fulfil their emissionsreduction obligations by investing in emission reductions in the rest of theworld. This arrangement could become a major loophole that dilutes theemissions reduction plan (The Economist, 2008).5

On the other hand, given its heavy dependence on fossil fuels (especiallyoil) and its highly wasteful energy infrastructure, the US capitalist classhad, until recently, been much more hesitant to make a serious commitmentto climate stabilization. Under the Obama administration, the US is likelyto take a much more active stance, but it remains uncertain whether theObama administration will commit itself to sufficiently serious actions andobligations.

4. Historically, the hegemonic powers of the capitalist world system have relied upon con-trol over globally effective means of violence, as well as universally accepted means ofpayment — that is, military and financial power (Arrighi et al., 1999). Some suggest thattoday’s advanced capitalist countries, such as the US and Europe, could lead the globalclimate actions by setting an example or standard (for example, see Galbraith, 2008). How-ever, even assuming that such example-setting is politically feasible within the advancedcapitalist countries, unless the peripheral and semi-peripheral states are willing to give upeconomic growth or accept a much slower pace of growth, it is not clear how examples bythemselves could persuade the peripheral and semi-peripheral states to take sufficient andtimely actions towards climate stabilization. This will be discussed below.

5. China now accounts for about 20 per cent of the world’s carbon dioxide emissions, whilethe European Union accounts for about 15 per cent. Thus, if China’s emissions were togrow by 15 per cent in two years (corresponding to an annual growth rate of 7 per cent),it would be sufficient to offset a 20 per cent reduction of European emissions. For morediscussions on the problems of carbon trading and carbon credits, see Lohmann (2006).

Alternative Scenarios for the US, China and the World 1045

While historically the core states have been responsible for most of thegreenhouse gases that have accumulated in the atmosphere, in recent yearsbig semi-peripheral states (the so-called ‘emerging markets’) have beenresponsible for most of the growth of greenhouse gas emissions. Accordingto World Bank data, the ‘low and middle income’ countries now accountfor about half of the world’s total carbon dioxide emissions and accountedfor about three-quarters of the world’s increase in emissions from 2000 to2004 (World Bank, 2008). Without substantial emissions reductions by bigsemi-peripheral states such as Brazil, China, India, Mexico and South Africa,there is virtually no hope for global climate stabilization to be achieved.

Despite their rapid pace of accumulation and economic growth, big semi-peripheral states are still far behind the core states in terms of per capitaincome and resources consumption. These states have relied upon cheaplabour force and cheap resources as their main ‘comparative advantages’ inglobal capitalist competition. They also depend on rapid economic growthto alleviate domestic political and social tensions.6 Not surprisingly, theruling elites of the major ‘emerging markets’ have converged towards aposition that vigorously opposes any climate stabilization action that wouldthreaten to lower their economic growth rates and insist that almost the entireeconomic burden of climate stabilization must be placed on the core states.

At the G8 summit in Japan in July 2008, after difficult negotiations, theleaders of the eight industrial countries managed to agree on a vague goalto reduce carbon dioxide emissions by 50 per cent by 2050 (but withoutagreeing on a starting year). This was immediately rejected by the leadersof Brazil, China, India, Mexico and South Africa, who urged the ‘developedcountries’ to reduce emissions by 80–95 per cent from 1990 levels by 2050and demanded financial support to help ‘developing countries’ to adapt toclimate change. The Chinese President, Hu Jintao, said that China, beinga developing country, would have to focus on industrialization and raisingpeople’s living standards. The joint statement of the five leaders insisted thatthe ‘developed countries’ must ‘take the lead in achieving ambitious andabsolute greenhouse gas emission reductions’ (Hornby, 2008; Wintour andElliott, 2008).

As world leaders headed for Poland, for United Nations talks to preparea new treaty to replace the largely ineffective Kyoto protocol, China called

6. Measured by Gini coefficient, Brazil, China, Mexico and South Africa all havehigher degrees of inequality in income distribution than the advanced capitalist coun-tries (see UNDP, 2008; also the website of Wikipedia: http://en.wikipedia.org/wiki/List_of_countries_by_income_equality). India has a smaller Gini coefficient butwidespread poverty. The middle classes in these countries have strong desires to matchthe living styles of middle classes in western countries. The working people have toleratedtheir current dreadful living and working conditions as they hope for much improvement inthe not too distant future. The political legitimacy of governments in these countries verymuch depends on the implicit promise that in the long run, the general population’s livingstandards will catch up with those in the West.

1046 Minqi Li

for developed countries to spend 1 per cent of their GDP (or more than US$300 billion) to help developing countries to cut greenhouse gas emissionsand transfer ‘green’ technologies. In return, China has offered no concreteemissions reduction goals. The Financial Times reported that: ‘Officialsinvolved in the talks said China’s demand was unlikely to be agreed bydeveloped countries, but reflected a widespread feeling among poor nations’(Dyer and Harvey, 2008).

CLIMATE STABILIZATION: ALTERNATIVE SCENARIOS

This section will evaluate alternative scenarios of energy supply and eco-nomic growth for the world. These scenarios suggest that under no plausiblecircumstances could the emissions reduction required for climate stabiliza-tion be compatible with the pace of economic growth required for capitalisteconomic and political stability.

Measured by radiative forcing, carbon dioxide accounts for about three-quarters of the total long-lived greenhouse gases in the atmosphere and morethan 100 per cent of the total net anthropogenic forcing when offsettingeffects from aerosols are taken into account (IPCC, 2007a).7 Rising atmo-spheric concentration of carbon dioxide results primarily from the burningof fossil fuels. To reduce carbon dioxide emissions and stabilize the cli-mate, human energy consumption and economic activities must undergofundamental changes.

There are three possible substitutes for the current form of fossil fuelconsumption: renewable energies, nuclear energy and fossil fuel consump-tion with carbon capture and storage. Carbon capture and storage can onlybe applied to large, stationary facilities. It will substantially reduce energyefficiency and raise the cost of energy investment. Most importantly, com-mercial scale application of carbon capture and storage is unlikely to beready before 2030 and even then may not be applied to a large portion of thepower plants, while climate stabilization requires that global carbon dioxideemissions start declining by no later than 2015 (Greenpeace International,2008a; Viebahn et al., 2009).

Nuclear electricity generation uses uranium, which is a non-renewableresource and will not last very long with conventional nuclear reactors.According to the Energy Watch Group (2006), the world’s proven andpossible uranium resources could only last between thirty and seventy years.Moreover, given the slow pace of nuclear reactor construction, the building

7. Carbon dioxide and other greenhouse gases (such as methane and nitrous oxide) contributeto global warming. But anthropogenic contributions to aerosols together produce a coolingeffect. The cooling effect of aerosols is slightly greater than the warming effect of non-carbon dioxide greenhouse gases. Thus, carbon dioxide accounts for more than 100 percent of the net warming effect.

Alternative Scenarios for the US, China and the World 1047

of new nuclear power plants in the coming years will be barely enough toreplace the old nuclear plants that are going to retire.

Fast breeder reactors (which could increase the lifetime of uranium re-sources 100-fold) are expensive to construct, difficult to operate and main-tain, and have serious safety concerns. The technology may not be maturefor decades. The long-term prospect of nuclear fusion technology, whichtheoretically could provide almost unlimited energy supply, is even moreuncertain (Heinberg, 2004: 132–9; Kunstler, 2005: 140–6; Trainer, 2007:119–24).

Among the renewables, only wind and solar power have the long-termphysical potential to provide an energy supply that is comparable to orpossibly greater than the present world energy supply. Even wind and solarare subject to long-term physical limitations, however. They are intermittentenergy sources, which could limit their penetration in electricity supply; andin general, they can only be used to produce electricity (Lightfoot and Green,2002; Trainer, 2007).

Energy is the foundation of the modern industrial economy. To replacefossil fuels with other forms of energy consumption requires fundamen-tal changes of society’s energy, transportation and industrial infrastructure.Even leaving aside more fundamental limitations, the potential for emis-sions reduction and energy de-carbonization could simply be limited by therealistic pace of infrastructural construction.

In the post-fossil fuel world, electricity from various renewable sourceswill have to play a dominant role in overall energy consumption. However,the construction of power plants and other electricity facilities requires notonly financial resources, but also workers, technicians and engineers withspecial skills and expertise, as well as equipment and materials that haveto be produced by specialized factories. One cannot simply print billions ofdollar bills and expect renewable electricity to be generated. Instead, workersneed to be trained in the necessary skills, and new equipment and materialsneed to be produced. All of these — as well as the construction processitself — will not only consume resources but also take time. Thus, as a ruleof thumb, over any particular period, the power industry’s total installationcapacity must set the upper limit to the expansion of renewable energies.8

Moreover, massive investment is required to expand and transform electricgrids, and to electrify much of the transportation, industrial and residentialinfrastructure.

Table 1 presents the historical performance and three different projectedscenarios of world energy supply, with fossil fuel consumption falling inaccordance with the requirement of climate stabilization. Some assumptions

8. For example, suppose an economy, given its engineering and construction capacity, caninstall no more than 50 giga-watts of power plants of any type over a year. Roughly speaking,this economy’s renewable electricity generating capacity can grow at a maximum annualrate of 50 giga-watts.

1048 Minqi Li

Tabl

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nerg

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rica

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ject

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Rea

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PY

ears

and

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nari

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toe)

(TW

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(TW

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(TW

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(GW

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($/t

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(Tri

llio

n$)

His

tori

calP

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rman

ce:

2005

:92

6027

7131

9313

964

9785

5720

56.0

1980

–200

5(a

nnua

lrat

eof

chan

ge):

1.7%

1.4%

3.1%

Pro

ject

ions

:Sc

enar

io1

2050

1187

5542

6386

1986

390

7039

2113

944

54.7

2005

–205

0(a

nnua

lrat

eof

chan

ge):

−2.0

%2%

−0.0

5%

Scen

ario

220

5011

8755

4263

8639

573

1807

056

1613

944

78.3

2005

–205

0(a

nnua

lrat

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chan

ge):

−1.2

%2%

0.7%

Scen

ario

320

5011

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4263

8678

993

3607

090

0513

944

125.

620

05–2

050

(ann

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are

from

BP

(200

8a)

and

Wor

ldB

ank

(200

8).

Alternative Scenarios for the US, China and the World 1049

Assumptions of Table 1

1. Total world emissions of carbon dioxide fall by 85 per cent from 2000 levels by 2050,implying a reduction by 87 per cent from 2005 levels. This is consistent with the emissionreduction required to prevent global warming of 2 degrees Celsius as is suggested by theIPCC report.

2. Emissions from land development and other sources fall by the same proportion asemissions from fossil fuels burning.

3. Changing composition among different types of fossil fuels is ignored. Thus, total fossilfuel consumption is assumed to fall by 87 per cent from the 2005 level by 2050. Thisassumption could prove to be too optimistic because, as global oil production peaks andstarts to decline, there may be incentives for businesses and national governments toreplace oil with coal, which has a much higher carbon intensity.

4. Carbon capture and storage is ignored because of its negative impact on energy efficiencyand investment cost.

5. Liquid fuels made from biomass are ignored. Biomass potential is limited by the avail-ability of productive land and fresh water. Moreover, recent studies suggest that bio-fuelscould in fact result in even more greenhouse gas emissions than conventional fossil fuels(Fargione et al., 2008; Monbiot, 2008; Trainer, 2007: 73–92).

6. Wind and solar electricity is assumed to undergo massive expansions so that by 2050,under alternative scenarios, wind and solar electricity generation is expected to be roughly100, 200, or 400 per cent of the world’s total present electricity generation.

7. Wind and solar generating capacity is assumed to have a 25 per cent annual capacityutilization rate. Thus, one giga-watt of wind or solar generating capacity would generate2.19 trillion-watt hours of electricity over a year. By comparison, in 2007, the averagecapacity utilization rate of wind electricity in the US was 23 per cent and that of solarelectricity was 14 per cent (EIA 2008a).

8. Electricity generation from nuclear, hydro, and other renewable sources is expected todouble from 2005 to 2050.

9. Primary electricity, such as electricity from renewable and nuclear sources, is measuredby its electrical energy content (11.63 trillion-watt hours = 1 million metric tons of oilequivalent). The substitution of primary electricity for fossil fuels is treated as efficiencyimprovement.

are presented in the text box related to Table 1. Each of the three scenariospresents a particular trajectory of world energy supply, which implies aparticular trajectory of world economic growth given the assumed energyefficiency improvement. The relationship between energy supply, energyefficiency and economic output is explained by the following identity:

World Real GDP = World Energy Supply ∗ World Energy Efficiency

In Scenarios 1, 2 and 3, the world is assumed to build 200, 400 and 800giga-watts of wind and solar electricity capacity, respectively, every yearfrom 2005 to 2050. Under these scenarios, the world economy is projectedto grow at an average annual rate ranging from −0.05 per cent to 1.8 percent.

For example, in Scenario 1, fossil fuel consumption is projected to fallby 87 per cent from 2005 to 2050. On the other hand, by 2050, the world

1050 Minqi Li

is assumed to have built more than 9,000 giga-watts of wind and solarelectricity. Nuclear electricity, hydro electricity and other renewables areprojected to double from 2005 to 2050. Despite the massive expansion ofrenewable energy, the world total energy supply falls by about 60 per centfrom the 2005 level. However, the world energy efficiency is more thandoubled, resulting in a world economic output in 2050 that is marginallysmaller than that in 2005.

These projected rates of wind and solar power installation comparefavourably with the actual rates of installation of the world electricity indus-try. In 2005, the world’s total net installation of all types of power capacitywas only 134 giga-watts (EIA, 2008b). In 2007, the world installed 20giga-watts of wind electricity and in 2006, the world installed less than 2giga-watts of solar photovoltaic electricity (BP, 2008b). The projected in-stallation rates also compare favourably with some other long-term energyprojections. For example, the International Energy Agency projects an av-erage annual construction of 70 giga-watts of wind power and 50 giga-wattsof solar power (a total of 120 giga-watts) from now to 2050 (IEA, 2008).Greenpeace International (2008b) projects a total installation of 6,600 giga-watts of wind and solar electricity by 2050, implying an average annualconstruction of about 150 giga-watts from 2005 to 2050.

From 1980 to 2005, the average annual growth rate of the world’s energyefficiency (the ratio of energy consumption to GDP) was 1.4 per cent. InTable 1, it is assumed that the rate of improvement of the world energyefficiency would accelerate to 2 per cent a year. By comparison, InternationalEnergy Agency expects the average annual growth rate of world energyefficiency from 2005 to 2050 to be between 1.4 and 1.7 per cent (IEA,2008). Lightfoot and Green (2001) studied the long-term physical potentialof world energy efficiency and concluded that assuming the full potentialwere to be realized by 2100, then the long-term average annual growth rateof energy efficiency from 1990 to 2100 would be in the range of 0.8–1.3 percent.

Despite such optimistic assumptions, to achieve the required emissionreduction the world economy would have to stop growing completely un-der Scenario 1. Considering that world population grows at about 1 percent a year, only Scenario 3 could bring about some growth of per capitaincome. For Scenario 3 to be realized, however, the world would have tobuild 800 giga-watts of wind and solar power capacity a year. According tothe US Energy Information Administration, the near-future capital cost for1 giga-watt of wind electricity is estimated to be US$ 1.4 billion and thatfor 1 giga-watt of solar photovoltaic electricity is estimated to be US$ 5.6billion (EIA, 2008c). If the world were to build 800 giga-watts of windand solar electricity each year, and if wind and solar were each to accountfor half of the installations, then annual investment cost would amount toUS$ 2.8 trillion. This huge amount represents about 5 per cent of the world’scurrent GDP, and about one-quarter of the world’s gross savings or total

Alternative Scenarios for the US, China and the World 1051

fixed investment. Over forty-five years, the total investment cost would beUS$126 trillion. And that does not include any of the investment cost thatwould be required to expand and rebuild the electric grids and to electrifythe entire economic infrastructure.9

As mentioned above, the affordability of financial resources is not the onlyissue here. There is also the constraint of engineering and technical capacity.Building 800 giga-watts of power capacity a year is roughly equivalent torebuilding the entire power industry of the US or China, each year. It wouldrequire a quintupling of the world power sector’s installation capacity andwould demand that this entire capacity be used for the building of wind andsolar electricity. Since wind and solar are intermittent energy sources, theyneed to be backed up by substantial amounts of conventional power. Eachgiga-watt of wind or solar electricity may need the backup of an additionalgiga-watt of conventional electricity (such as coal, natural gas or nuclear).This consideration alone would make it impossible to convert a society’sentire power installation capacity to the building of solar and wind electricity(Trainer, 2008).

From 1913 to 1950, a period that included two world wars and the GreatDepression, the world economy grew at an average annual rate of 1.9 percent (Maddison, 2003). Between 1960 and 2005, the world economic growthrate fell below 2 per cent on only three occasions: during 1974–75, 1980–82 and 1991–93. These were generally considered to be periods of majorworld economic crisis (as well as political and social instability).10 Thus,even Scenario 3 would represent a performance that is no better than previousperiods of global economic depression and geopolitical chaos, and could verywell qualify as permanent global depression. If past historical experienceserves as a guide, then none of the three scenarios could secure economicand political stability for the capitalist world system.

SOCIAL CHANGE AND CLIMATE STABILIZATION

Social Change in the US and Climate Stabilization

Table 2 presents alternative scenarios of energy supply for the US and Chinaunder assumptions required for climate stabilization. To achieve the global

9. According to IEA (2008), to reduce global carbon dioxide emissions by 50 per cent by2050 from the current levels will require an additional fixed investment of US$ 45 trillionor US$ 1.1 trillion a year. The IEA estimate refers to the additional investment on top ofthe business-as-usual investment in the energy sector. As discussed earlier, based on thecurrent scientific evidence, climate stabilization requires reducing emissions by 85 per centfrom the 2000 levels.

10. There is no generally accepted definition of global economic recession, as contraction ofsome parts of the world economy may be offset by expansion of some other parts. However,the International Monetary Fund now defines global recession as any period when worldannual economic growth rate, measured by purchasing power parity, falls below 3 per cent;see http://www.economist.com/finance/displaystory.cfm?story_id = 12381879

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Table 2. Energy Supply Scenarios: The US and China (annual rates of change)

Years and Scenarios Energy Supply Energy Efficiency Real GDP

USHistorical Performance (1980–2005):

0.9% 2.1% 3.1%Projections (2005–2050):Scenario 1 −2.6% 2% −0.6%Scenario 2 −1.5% 2% 0.5%Scenario 3 −0.3% 2% 1.7%

ChinaHistorical Performance (1980–2005):

5.3% 4.2% 9.8%Projections (2005–2050):Scenario 1 −1.4% 3% 1.5%Scenario 2 −0.5% 3% 2.5%Scenario 3 0.7% 3% 3.7%

Source: Author’s construction. Historical data of world energy supply and GDP are from BP (2008a) andWorld Bank (2008).

objective of required emissions reduction and assuming that by 2050 the USper capita emissions would converge towards the world average, US fossilfuel consumption is assumed to fall by 97 per cent from 2005 to 2050.

Under Scenarios 1, 2 and 3, the US is assumed to build 50, 100 and 200giga-watts of wind and solar electricity, respectively, every year from 2005to 2050. By comparison, in 2007, the US total installed power capacity wasabout 1,000 giga-watts and the US net installation of all types of powercapacity was only 12 giga-watts (EIA, 2008a). In addition, US electricitygeneration from nuclear, hydro and other renewable sources is assumed todouble from 2005 to 2050. The US energy efficiency is assumed to convergeto the world average by 2050.

To achieve the required emissions reduction, the average annual growthrate of the US economy would have to be −0.6, 0.5 and 1.7 per cent, re-spectively, under Scenarios 1, 2 and 3. Only Scenario 3 would deliver somepositive growth of per capita income. But for Scenario 3 to be achieved(which would still represent, in conventional term, a significant deteriora-tion relative to past economic performance), the US must build 200 giga-watts of wind and solar power capacity each and every year. If half of the200 giga-watts were to be wind electricity and the rest solar electricity, thengiven the near-future cost, this would represent an annual investment costof US$ 700 billion.11 Regardless of the financial cost, in engineering terms,

11. If all of the 200 giga-watts of power capacity were to be wind electricity, then the totalcost would be ‘only’ US$ 280 billion. However, wind electricity has severe intermittencyproblems and may seriously undermine the reliability of the conventional electric grid if itsshare in total power capacity is more than 20 per cent. In the long run, wind electricity is alsosubject to the limits of available land. Trainer (2007: 15–17) estimates that the maximumtechnical potential of wind electricity in the US may be no more than 300 giga-watts of fullcapacity power or approximately 1,200 giga-watts of wind power capacity (which wouldbe exhausted in six years if 200 giga-watts of wind power were built each year).

Alternative Scenarios for the US, China and the World 1053

this represents a task that would require the rebuilding of an entire US powerindustry every five years.

On the other hand, emissions reduction helps to save expenses on fossilfuels. From 2005 to 2050, US fossil fuel consumption is expected to fall by2,040 million metric tons of oil equivalent, with an average annual reductionof 45 million metric tons of oil equivalent (or 330 million barrels of oilequivalent). Valued at US$ 70 a barrel (roughly the average price in 2007),the initial annual financial saving would amount to only US$ 23 billion.After ten years, the annual saving would rise to US$ 230 billion. Only afterthirty years would the annual financial saving resulting from reduced fossilfuel consumption start to rise above the investment cost required for buildingrenewable electricity.

The construction of new renewable electricity capacity would not beenough by itself. The current electric grid is outdated and cannot accom-modate more than a small proportion of electricity being from intermittentsources, such as wind and solar. The entire national electric grid thus needs tobe rebuilt. In addition, wind and solar can only be used to generate electricity:they cannot be used to power transportation, industry and many other uses.Given the limitations of biomass (see text box after Table 1), for renewableenergies to become the primary energy sources in the economy, much of thetransportation and other infrastructure will need to be rebuilt and electrified.Taking into account all of these expenses, in the coming decade, the annualinvestment cost to develop renewable energy and to transform the US energyinfrastructure would amount to at least US$ 500–700 billion and possiblyeven more.

The Obama administration promises to develop and implement a newenergy policy and commit the US to ambitious goals of greenhouse gasesemissions reduction. However, there has not yet been any evidence suggest-ing that the actions Obama is ready to take are up to the task of climatestabilization. During the 2008 election, he promised to spend US$ 150 bil-lion on alternative energy over a period of ten years (Walsh, 2008). In thenew economic stimulus plan recently proposed by Obama, US$ 100 bil-lion were assigned to spending on energy and environmental projects overtwo years (McDonough, 2008). These spending commitments fall far shortof what would be required for the US to meet its global obligation of cli-mate stabilization while achieving what is, in effect, no more than economicstagnation.

How could the annual investment required for climate stabilization befinanced? The revenue could be collected from auctions of carbon permits,carbon tax or other forms of taxes. But one way or another, someone hasto pay for it. Who will that someone be? Can it be financed by taxes onthe US working class? The US working class has already been strugglingwith declining real wages, overwhelming household debt and ever-escalatinghealth care costs (as well as the lack of universal health insurance). A further,major increase in tax or cost of living for the US working class could threatento destroy the political legitimacy of American capitalism. Can it be financed

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by taxes on the US capitalist class? The US total after-tax corporate profitsamount to about US$ 1 trillion. It is unlikely that the American capitalistswill give up more than half of their corporate profits. Can it be financedby more borrowings from foreigners? An additional annual borrowing ofUS$ 500–700 billion would expand the US trade deficit from the current5 per cent of GDP to 10 per cent of GDP. The US foreign debt would soonreach astronomical levels and the bankruptcy of the US treasury would beguaranteed.12

Leaving aside the question of whether the US climate stabilization invest-ment can be adequately financed, for the US to meet its global obligation,fossil fuel consumption in that country needs to fall at an average annual rateof 7.7 per cent. Whether this is achieved through carbon trade, carbon taxor other mechanisms, it is obvious that climate stabilization actions wouldlead to large, sustained increases in fossil fuel costs (this is the only way inwhich fossil fuel consumption can be reduced in a market economy). Unlessthe cost of renewable energy falls sharply and the production of renewableenergy is scaled up rapidly in the coming years, this will translate into large,sustained increases in energy costs.

Unless China, India and other large semi-peripheral states are willing toparticipate in serious and meaningful global climate stabilization actions (avery unlikely scenario), rising energy costs in the US and Western Europewould simply drive the remaining industrial capital from the core statesto the periphery and semi-periphery. The US government could attempt toregulate capital flows and enforce ‘fair trade’, but would this be politicallyfeasible? The regulation of capital flows will have to include not only finan-cial capital flows but also foreign direct investment and intra-corporationcross-border trade. Can this be done without changing the basic capitalistproperty relations?

If the Obama administration fails to put the US firmly on track to climatestabilization (meaning not only making some gestures, but committing toemissions reduction by 97 per cent by 2050), then far more radical politi-cal changes would be required than the ‘change’ Obama has been talkingabout.

12. Throughout this paper, the basic argument is that the expansion of renewable electricityis constrained by an economy’s engineering and technical capacity as well as its abilityto mobilize the required financial resources (rather than that individual units of renewableelectricity are more expensive than those of conventional electricity). In the future, as fossilfuels and carbon prices rise and renewable energy costs fall, private capitalists certainlywill find the investment in renewable energy more attractive. However, no matter whathappens to relative prices in the future, to build 200 giga-watts of wind and solar electricitya year now, the US would still need to find US$ 500–700 billion somewhere. Given theobvious urgency of the climate situation, this needs to happen now rather than later, whichmeans that the investment plan would have to be based on the current renewable energy cost(rather than the possibly lower cost in the future). Moreover, to build the 200 giga-watts,the US power sector needs to find engineers, workers and equipment at a rate 10–20 timesgreater than the current rate.

Alternative Scenarios for the US, China and the World 1055

Social Change in China and Climate Stabilization

To achieve the global objective of required emissions reduction and assum-ing that by 2050 China’s per capita emissions would converge towards theworld average, China’s fossil fuel consumption needs to fall by 86 per centfrom 2005 to 2050. Under Scenarios 1, 2 and 3 of Table 2, China is assumedto build 50, 100 and 200 giga-watts of wind and solar electricity, respec-tively, every year from 2005 to 2050. By comparison, in 2006, China’stotal installed power capacity was 622 giga-watts and the net installation ofall types of power capacity was 105 giga-watts (Cui, 2008: 218). China’selectricity generation from nuclear, hydro and other renewable sources isassumed to quadruple from 2005 to 2050 and China’s energy efficiencyis assumed to converge to the world average by 2050.

Under Scenarios 1, 2 and 3, China’s economic growth rate needs to fall to1.5, 2.5 and 3.7 per cent respectively. It appears that China could manage toachieve some levels of positive economic growth. However, this representsa sharp deceleration from its historical rapid growth rate. China’s economicgrowth has been accompanied by rapid rises of inequality and intensifiedsocial conflicts. It is widely believed that China needs to have at least 7–8 per cent growth rate to generate employment growth and maintain socialstability (Roubini, 2008). The projected 1.5–3.7 per cent growth rates thusfall far short of what would be required to maintain economic and politicalstability in China.

The projected growth rates refer to average growth rates from 2005 to2050. If China continues to maintain rapid growth in the coming years, thenit would have used up its economic growth ‘quota’ very soon. For example,if the Chinese economy were to grow at an average annual rate of 8 percent from 2005 to 2020, then to achieve the required emissions reductionobjective by 2050, its average annual economic growth rate from 2020 to2050 would have to fall to −1.6, −0.1 and 1.7 per cent, respectively, forScenarios 1, 2 and 3.

The scenarios assume that China could build 50–200 giga-watts of windand solar electricity every year without being subject to technical and phys-ical limits. However, China actually has a relatively limited physical poten-tial of renewable energy. Its long-term onshore and offshore wind electricitypotential is estimated to be 1,000 giga-watts (Cui, 2008: 273). Solar photo-voltaic electricity is much more expensive and is limited to day-time use.The more promising solar technology is known as the solar thermal tech-nology or concentrated solar power, which allows solar energy to be storedas heat and thus has less of a problem of intermittency. However, the solarthermal technology works best in tropical and sub-tropical deserts. Chinadoes not have access to such geographical areas.

We have already noted that unless China takes serious and meaningfulactions to fulfil its obligation of emissions reduction, there is little hope thatglobal climate stabilization can be achieved. However, it is very unlikely

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that the Chinese government will voluntarily take the necessary actions toreduce emissions. The sharp fall of economic growth that would be requiredis something that the Chinese government will not accept and cannot af-ford politically. Does this mean that humanity is doomed? That dependson the political struggle within China and in the world as a whole. China’scurrent model of capitalist development has rested upon three pillars: export-oriented economic growth, the exploitation of a large, cheap labour force andthe exploitation of the world’s natural resources and environmental space.As the global economic crisis continues to deepen, the leading capitalistcountries in North America and Western Europe will face prolonged eco-nomic difficulties. If the global economy does manage to recover in the nextfew years, global economic growth could soon be limited by the declineof world oil production.13 A prolonged global economic crisis will imposeserious constraints on China’s export-oriented economic growth.

Up to now, Chinese and foreign capitalists in China have enjoyed almostcomplete freedom in exploiting Chinese workers. However, as China’s ruralsurplus labour force starts to be depleted and tens of millions of migrantworkers gradually settle down in the cities, the relation of forces between thecapitalists and the workers will start to shift slowly in favour of the workers.In recent years, there has been some pressure for wage rates in the coastalprovinces to rise and the Chinese government has also taken some limitedactions to improve workers’ conditions in order to secure social stability.In one or two decades, one would expect that the Chinese working classwould follow the examples of workers in other countries, getting organizedfor economic and political struggles and demanding a growing range ofeconomic, social and political rights. The political awakening of the Chineseworking class will undermine the foundation of the current model of Chinesecapitalism.

China depends on coal for 70 per cent of its energy consumption. Itproduces nearly half of the world’s total coal production but has only one-eighth of the world’s official coal reserves (BP, 2008a). According to RichardHeinberg (2008), China’s coal production could peak between 2015 and2030. Beyond 2020, China is likely to face an insurmountable energy crisisas coal production growth slows sharply.14 The coming energy crisis could

13. There is a growing body of evidence suggesting that world oil production will peak verysoon or is likely to have already peaked. For a projection of the future world oil production,see ASPO (2008).

14. It is unlikely that China could deal with the coming energy crisis through energy importsfrom the rest of the world. By 2020, world oil production is likely to be in irreversibledecline. Massive imports of coal are unlikely because of the high cost of long-distance coaltransportation, and because coal production in the advanced capitalist countries (such as inthe US and Australia) could be limited by domestic social and environmental constraints.In the coming years, there is likely to be growing international pressure on China to dealwith climate stabilization, which could lead to political pressure to limit energy exports toChina.

Alternative Scenarios for the US, China and the World 1057

trigger a series of economic and political chain reactions that would in turndestroy China’s entire existing social regime. What will happen next?

One might hope that China’s ruling elites would be willing to voluntarilygive up their political and economic power, allowing China to undergo apeaceful democratic transition. The Chinese people would then engage in anopen, rational debate, reaching a democratic consensus regarding China’s fu-ture. Hopefully, through such a debate, the Chinese people would collectivelyreach the conclusion that China’s own long-term interests ultimately dependon climate stabilization and global ecological sustainability, which have totake absolute priority in the shaping of China’s future social transformation.

Unfortunately, the more likely scenario is that the Chinese ruling elites willattempt to retain their power and privileges as long as possible. The country’sexisting social regime nevertheless will no longer be sustainable: as a result,the collapse of the regime is likely to be followed by decades of political andsocial chaos, with devastating consequences for the Chinese people. On theother hand, with the collapse of industrial production and massive declinesof material consumption, China’s greenhouse gas emissions will fall sharply.This is by no means to be seen as a preferred outcome, but objectively thecollapse of the Chinese economy could provide the space and time for therest of the world to make the necessary climate stabilization adjustments.Different social classes and political forces will then engage in a long-termstruggle that will decide who eventually will prevail and how China’s futurewill be constructed.

Global Social Change and Climate Stabilization

Like all other social systems, the existence and operation of capitalismdepend on certain historical conditions. But underlying historical conditionshave a tendency to change: it is inevitable that beyond a certain point,the underlying conditions will have changed so much that capitalism isno longer viable. Immanuel Wallerstein has argued that after centuries ofrelentless accumulation, the underlying economic, political and ecologicalcontradictions have grown to the point that they can no longer be resolvedwithin the framework of capitalism. Capitalism has by now entered into itsstructural crisis and is unlikely to survive beyond the middle of the twenty-first century. The future of humanity depends on the global class struggle,which will determine what social system or systems (if any) will emerge andprevail after the demise of the existing system (Wallerstein, 2003).

The global climate crisis is just one of these fundamental contradictions.Because of inter-state competition and geopolitical conflicts under the cap-italist system, climate stabilization efforts are confronted with insurmount-able political obstacles. Moreover, as discussed above, even with wildlyoptimistic assumptions, there is no way for climate stabilization to be madecompatible with rates of economic growth required for capitalist economicand political stability.

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In his most recent book, James Gustave Speth, one of the world’s leadingenvironmental scholars and by no means a political radical, argues that itis impossible to achieve environmental sustainability within the frameworkof modern capitalism (understood as the economic system that promotesperpetual economic growth); he contends that fundamental social changesmust take place if a global environmental breakdown is to be avoided: ‘[To-day’s] system of political economy, referred to here as modern capitalism,is destructive of the environment, and not in a minor way but in a way thatprofoundly threatens the planet; people will therefore demand solutions, andthe current system will not be able to accommodate them; so the systemwill be forced to change’ (Speth, 2008: 194). Thus, capitalism is no longera viable historical option. One way or the other, fundamental social changeswill happen in the coming decades. The task of the world’s oppressed andexploited is to take this historical opportunity and build a new society basedon democracy, egalitarianism and ecological sustainability.

The collapse of capitalism and the establishment of a post-capitalist soci-ety will not automatically guarantee the solution of the climate change crisisand a successful transition to ecological sustainability. However, without thecompulsive competitive demands imposed by the global capitalist market,humanity will be freed from the constant and intense pressure of ceaselessaccumulation. Humans will be in a position to apply their collective ratio-nality. Hopefully, people throughout the world will engage in a transparent,rational and democratic debate which is open not only to economic and polit-ical leaders and expert intellectuals, but also to the broad masses of workersand peasants. Through such a global collective debate, a democratic consen-sus could emerge that would decide on a path of global social transformationthat would in turn lead to climate stabilization and ecological sustainability.

This may sound too idealistic. But can we really count on the world’s ex-isting elites to accomplish climate stabilization while meeting the world pop-ulation’s basic needs? Ultimately, climate stabilization can only be achievedif the great majority of the world’s population (not just the elites and the eco-logically conscious middle class individuals) understand the implications,relate these implications to their own lives, and actively and consciouslyparticipate in the global effort of stabilization.

While it is impossible to predict the precise form that the future post-capitalist society will take, there are certain objective constraints that willbe imposed on future generations as they make their own history. First,to be ecologically sustainable, the future society must not be dominatedby market relations. As we have seen, as long as the market dominates asociety’s economic and social relations, individuals and businesses fall undera constant and inescapable pressure to pursue economic growth. This cannotbe removed through limited government regulations that do not challengethe dominance of the market, as the national governments themselves arealso under constant pressure in the global market to compete against oneanother to pursue economic growth.

Alternative Scenarios for the US, China and the World 1059

Thus, for an ecologically sustainable society, the use and allocation of so-ciety’s surplus product must come under some form of social control througheither political procedures or established social norms. Such a society mayor may not be economically less efficient than the current capitalist society(with ‘efficiency’ measured by current conventional criteria). However, ef-ficiency would, at most, be of secondary importance in the post-capitalistera. For the sake of the survival of humanity and civilization, it is absolutelyessential to ensure that the human economy operates within the ecologicalsystem’s natural capacity. With an ‘inefficient’ economic system (conven-tionally measured) that operates with limited and stable flows of materialconsumption, humanity can survive. With an economic system that is highlyefficient in generating economic growth, humanity will very soon be com-mitting collective suicide.

Second, the future post-capitalist society will not emerge out of a historicalvacuum. Rather, it will have to reflect the political and social developmentsthat have taken place in the capitalist era. Most importantly, it will haveto accommodate the relatively high levels of political consciousness andorganizational capacity of the working classes (in comparison with whatprevailed in the pre-capitalist societies) as well as manage to meet the pop-ulation’s ‘basic needs’ as they have been historically defined.

These two historical constraints imply that when the future post-capitalistsociety does emerge, it is likely to be based on some form of social controlover the surplus product (i.e. the appropriation and the use of the surplusproduct take place through political and social processes, preferably throughdemocratic planning, rather than through the market) and some forms ofsocial and community ownership of the means of production.

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Minqi Li was a political prisoner in China from 1990 to 1992. He receiveda PhD in economics from the University of Massachusetts Amherst in 2002.He taught political science at York University, Toronto, Canada from 2003to 2006 and since 2006 has been teaching economics at the University ofUtah. His book, The Rise of China and the Demise of the Capitalist WorldEconomy, was recently published by Pluto Press and Monthly Review Press(2009). He can be contacted at Department of Economics, University ofUtah, Salt Lake City, UT 84112, USA.